Blockchain - Distributed Ledger Technology: a stitch in time

Blockchain and Distributed Ledger Technologies (DLTs) are bringing disintermediation to nearly all industries, from the Financial Services Industry to other sectors like Healthcare, Energy, Telecommunications, and Supply Chain. In practice, blockchain technology offers a new way to trade, invest, and share information – including cash, property assets, or intellectual property – in a secure, transparent, and efficient way.

What is Blockchain?

What is Blockchain?

DLTs can be defined as digital and distributed transaction ledgers that stores blocks of data shared across a network of computer nodes. More specifically, blockchain technology consists in a decentralized ledger that operates in a transparent environment. Each block of the ledger contains data about transactions that have been executed on the platform. In order to add a block to the ledger, every computer node of the network needs to verify and validate it. Thanks to this verification the system does not need an intermediary to check transactions. Information stored in a blockchain can never be deleted and serves as a verifiable and accurate ledger of every transaction made within the system.

Challenges

Challenges

Blockchain can help in many domains, but the technology must still improve in some areas.

Nascent technology: Resolving challenges such as transaction speed, the verification process, and data limits will be crucial in making blockchain widely applicable.

Uncertain regulatory status: Distributed ledger technologies and cryptocurrencies face a large hurdle in widespread adoption by pre-existing financial institutions and potential users if government regulation status remains unsettled. Questions have to be resolved by regulators especially as regards their use as asset or money, the conditions for initial coin offerings, their leveraging for transaction processing platforms especially when they can disintermediate regulated third party intermediaries, the enforcement of smart contracts in court, etc.

The link between physical and digital: Some assets or transactions, such as books, music, and money transfers, are already digital or easy to digitalize. For others, such as physical arts or parcels, the link between physical assets and their digital representations - often called “tokens” - can only be made through integration with additional technologies such IoT with RFID chips.

Large energy consumption: Bitcoin blockchain network’s miners are attempting 450 thousand trillion solutions per second in efforts to validate transactions, using substantial amounts of computer power.

Data protection: With the new European regulation on data privacy (GDPR), Blockchain will have to implement the right to be forgotten, as all the transactions are recorded in the blockchain and cannot be deleted. A possible solution can be to anonymise the information sent to the blockchain. But blockchain implementers must keep in mind that GDPR cannot override other regulation, like MiFID II and Anti Money Laundering laws, and their associated record keeping requirements.

Cultural adoption: Blockchain represents a complete shift to a decentralized network which requires the buy-in of its users and operators.

Integration concerns: DLT application offer solutions that require significant changes to, or complete replacement of, existing systems and business processes. In order to make the switch, companies must strategize the transition.

How Deloitte can help

How Deloitte can help

Deloitte Luxembourg is one of the blockchain pioneers in the country. We created a Blockchain Lab in early 2015 and built our competences around technical and functional topics. Thanks to our blockchain knowledge and our subject matter expertise, we are in a position to provide a range of services to our clients: knowledge-building, broad network access, prototyping, and implementation.

Strategy and operating model design:

We organise and participate in workshops to present the concepts around blockchain and discuss the potential impact on your industry and business

We assist you in defining your strategy, business and operating models by analysing the market trends and your organisation’s internal potential

We design use cases to help you qualify the extent to which distributed ledger technology is better suited than traditional technologies

Technology selection:

We will select and use the most appropriate platform to realise your vision from the design phase to go-live

We are highly experienced working with smart contracts and the automation of processes across a distributed workflow architecture

Prototyping & proofs-of-concept:

We offer a proven process and framework to support you with rapid and agile prototyping, as well as technology demonstrations

Our cross-functional teams can develop proofs-of-concept for a variety of industries and mature them into production-ready solutions, using our framework of prebuilt assets and development kits

Implementation

Thanks to our expertise with IT systems and DLT, we can assist your business to overcome the challenges of implementing blockchain technology and integrating it with your IT systems

Contacts

Partner | Strategy & Corporate Finance Leader

Benjamin is an Advisory & Consulting Partner. He is specialised in Strategy and Operations set-up and efficiency engagements. He leads the Strategy, the Corporate Finance and the Regulatory Practices ... More

Partner | Technology Leader

Patrick is a consulting partner with more than 20 years’ experience. Patrick leads the Luxembourg technology practice with areas of interest in IT Strategy & Architecture, Digital transformation, Core... More

Director | Technology & Enterprise Applications

Thibault joined Deloitte in February 2006. His main areas of expertise are the design of IT strategy and target operating model, consulting in technology, and management of corporate-wide IT projects ... More

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.